2001 (10) TMI 248 - AT - Income Tax

Assessee denied tax exemption for non-educational activities; challenge to proceedings timing dismissed. Revenue appeals allowed.

Assistant Commissioner Of Income-Tax Versus Bal Bharti Nursery School.

The Tribunal held that the assessee did not qualify for exemption under section 10(22) of the Income-tax Act as its activities were deemed commercial and ... Exemptions, Educational Institutions Issues Involved:1. Exemption under section 10(22) of the Income-tax Act, 1961.2. Validity of proceedings under section 148 of the Income-tax Act, 1961.Summary:Issue 1: Exemption under section 10(22) of the Income-tax Act, 1961The Revenue appealed against the CIT(A)'s order granting exemption u/s 10(22) to the assessee, claiming it was an educational institution not for profit. The CIT(A) had relied on previous appellate orders for assessment years 1985-86, 1986-87, and 1988-89. The Tribunal examined whether the institution existed solely for educational purposes and not for profit. The Tribunal found that the assessee was charging high fees, resulting in substantial surpluses year after year, which were utilized for personal benefits of the Secretary and his family. The Tribunal concluded that the assessee's activities were commercial and for profit, thus not qualifying for exemption u/s 10(22). The order of the CIT(A) was set aside, and the Assessing Officer's order was restored.Issue 2: Validity of proceedings under section 148 of the Income-tax Act, 1961The assessee's cross objection challenged the validity of proceedings u/s 148, claiming the Assessing Officer did not validly assume jurisdiction. The cross objection was filed with a delay of 2452 days, which the assessee attributed to not being advised of its right to file. The Tribunal found this reason insufficient and noted the assessee was aware of the appeal proceedings since 1990. Consequently, the Tribunal rejected the assessee's plea for condonation of delay and dismissed the cross objection in limine.Conclusion:The Tribunal ruled that the assessee did not qualify for exemption u/s 10(22) as it was not solely for educational purposes and was operating for profit. The Tribunal also dismissed the assessee's cross objection challenging the validity of proceedings u/s 148 due to an unreasonable delay in filing. The revenue's appeals were allowed, and the orders of the CIT(A) were set aside.